Magoveni Pharmaceutical Pty Limited v Pick 'n Pay Retailers Pty Limited and Another (2019/19666) [2020] ZAGPJHC 138 (8 May 2020)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 2019/19666

In the matter between:

MAGOVENI PHARMACEUTICAL PTY LIMITED Applicant

And

PICK ‘N PAY RETAILERS PTY LIMITED First Respondent

KAMESHINI PILLAY SC. N.O. Second

Respondent

J U D G M E N T

LAMONT J:

[1] The applicant brought an application to review and set aside an award granted on 7 May 2019 by the second respondent in favour of the first respondent. The applicant and first respondent had concluded a contract in terms whereof the second respondent was appointed as an arbitrator to rule on a dispute, which existed between the applicant and first respondent. During the course of the proceedings, which had by then, been running for a long time, the applicant changed counsel and his new counsel sought a postponement from the bar.

[2] There was no formal application for a postponement; a ruling was made by the arbitrator that the application for the respondent would not be considered unless there was a formal substantive application seeking the postponement. No such application was made, there was no grant of a postponement and the matter proceeded. The applicant’s new counsel represented him in the resumed hearing and participated in the continuation of the arbitration.

[3] The question to be decided is whether or not the ruling that the matter proceed unless there was a formal application for respondent

was a reviewable irregularity contemplated by the provisions of section 33 (1) (h) or (b) of the Arbitration Act 42 of 1965 hereafter referred to as “the Act”.

[4] It is common cause that the arbitrator was empowered by the agreement between the parties to decide the procedure which would be followed during the arbitration and was entitled to decide how interlocutory applications would be dealt with.

[5] At the time the applicant’s counsel sought the postponement, the question of the matter proceeding and the procedure to be followed, if it was not to proceed had been considered by the parties. The applicant on several occasions had previously been

placed on terms to comply with its obligations including dealing with various procedural matters relating to the pleading and discovery.

These rulings were necessary as the applicant was dilatory and had failed to comply with the obligations imposed upon it. During April 2018 the applicant was in breach of an order requiring it to make discovery; submissions were called for relating to the further conduct of the matter. The applicant failed to comply with its obligation to make submissions. On 3 May 2018 at the arbitration

hearing the applicant’s representative appeared unaccompanied by attorney or counsel and sought a postponement of the proceedings

on the basis that its attorneys had ceased to respond to email correspondence. The postponement was granted. On 23 May 2018 the

applicant appointed new attorneys and a fresh procedural timetable for the matter was agreed. At the close of the part heard arbitration

during July 2018 the parties agreed that the arbitration would continue during 26 and 27 November 2018. On 27 September 2018 the

applicant’s then attorneys withdrew. On 28 September 2018 the first respondent requested the arbitrator to issue a notice in terms of section 15 of the Act. The arbitrator did so and placed the applicant on terms as to when and where the arbitration was to proceed. By the end of October 2018, the applicant had not yet appointed attorneys or taken up a position with regard to the hearing which had been agreed to proceed on 26 and 27 November 2018. On 12 November 2018, a pre-arbitration meeting was held. At that meeting the applicant stated that new attorneys would be appointed by the end of the week and that the applicant was aware of the fact that the arbitration was to proceed on 26 and 27 November 2018. The parties to the arbitration confirmed that the hearing would continue on that date. The first respondent informed the applicant that no application for postponement would be contemplated and that any such application would be opposed. On 23 November 2018 the applicant’s new attorneys wrote to the first respondent requesting a short postponement. Over the weekend the applicant indicated that it sought a postponement. The arbitrator was advised and indicated that if the applicant sought the postponement a formal application must be brought.

[6] It is apparent from the foregoing that the applicant was dilatory in the conduct of the application and that the second respondent

required any postponement application to be brought by way of substantive application.

[7] On 26 November 2018 and at the hearing the applicant’s counsel said that he had recently received his brief and sought a postponement as he did not have a formal brief and was not familiar with the contents and substantive context of the matter. The arbitrator told him that she had sent an email saying that there should be a substantial application and that she hoped that it had been received. The counsel for the applicant stated that his attorney may have received the letter but that he had not received it and had no knowledge of it. The arbitrator stated: -

“… In the absence of a proper substantive application for up respondent before me, I unfortunately cannot deal with any application for a postponement, because there is literally nothing in front of me at the moment.” The applicant’s counsel responded “I sympathize with you, however, the unfortunate part is that the defendant is also not in a position to proceed given the fact that his legal team is quite new to the case and that counsel has not been properly briefed to duly attend to the merits. The arbitrator’s response was “on that score, and I haven’t taken the time to prepare timeline, because anticipated that the matter would continue today, but there is a very long history to this matter, including very specifically that act, not the lost time, the time before that, the matter was postponed at the request of your client because of difficulty with his attorneys of record and at that time we granted your client an indulgence and the matter was postponed. Subsequently new attorneys of record appeared …and the matter continued, and at the last hearing of the matter it was made very clear to your client that he would proceed today with your client presenting his case. All right? Now in between the last hearing of the matter which was in July and where we sit today we did receive a Notice of Withdrawal of his previous attorneys of record and before the new attorneys of record had placed themselves on record a pre-arbitration meeting was convened at the instance of the claimants. They requested a pre-arbitration meeting which was held in my chambers and at that meeting it was indicated that the matter would proceed.… Your client did indicate that he was going to get advice and the new attorneys would then take whatever steps they deem necessary but it was indicated to him in no uncertain terms, two things: Firstly, that I’ve got difficulty that my invoices have not been paid…” And also “there have been there has been enormous delays”

[8] Section 33 (1) of the act provides:

“(1) Where –

(a) any member of an arbitration tribunal has misconducted himself in relation to his duties as arbitrator or umpire; or

(b) an arbitration tribunal has committed any gross irregularity in the conduct of the arbitration proceedings or exceeded its powers; or

(c) an award has been improperly obtained the court may, on the application of any party to the reference …make an order setting the award aside.”

[9] Generally speaking, the arbitration proceedings will not be lightly interfered with and the only grounds upon which the award can be attacked are the grounds in section 33. See Telcordia Technologies Inc. v Telkom SA Limited [2006] ZASCA 112; 2007 (3) SA 266 (SCA) at paragraph 51, Lufuno Mphaphuli & Associates (Proprietary) Limited v Andrews and Another 2009 (4) SA 529 (CC) at paragraph 197, and Palabora Copper (Proprietary) Limited v Motlokwa Transport and Construction (Proprietary) Limited 2018 (5) SA 462 (SCA) at paragraph 8.

[10] Misconduct requires wrongful or improper behaviour, entailing moral turpitude dishonesty bad faith or the like. In ordinary circumstances where an arbitrator has given fair consideration to the matter it is unlikely that he will be held guilty of misconduct due to an error or mistake either of law or fact. In particular, where an arbitrator has a procedural discretion the court will not inquire into whether or not the discretion was correctly exercised. The court will only inquire into whether or not the arbitrator was so grossly unreasonable in the exercise of his discretion that it justifies the inference of bad faith on his part. See Bester v Easigas (Pty) Ltd and Another 1993 (1) SA 30 (C) at 31. The incorrect exercise of a mandate or power does not of its own constitute an irregularity, an arbitrator has a right to be wrong. Unless it is expressly excluded in the agreement, it is an implied term of every arbitration agreement that the proceedings

before the arbitrator will be procedurally fair. Fairness of course it depends on context.

[11] There is no indication, whether the decision be correctly made or not that the arbitrator was motivated by anything but good faith and an attempt to make the proceedings run smoothly efficiently and in the interests of the parties. The arbitrator did not commit any irregularity gross or otherwise. Accordingly, no ground of review contemplated by section 33 (1) (b) of the Act is of application. The arbitrator considered fairness, the purpose of the arbitration namely expedition and cost-effectiveness. She was faced with a situation where an arbitration had been running for a lengthy period of time, where the parties had agreed to carry on and where the applicant had at the pre-trial hearing itself contemplated no postponement. In the

circumstances, the attitude of the arbitrator that the application for the postponement be brought by way of a substantive application

was, at best, an error. It was not an act motivated by malice or bad faith.

[12] In the circumstances, the conduct of the arbitrator is not subject to review and for that reason the application must fail.

[13] I would dismiss the application with costs.

[14] The first respondent has brought a counter application seeking that the arbitration award be made an order of court. In my view, the counter application has merit and I would make an order in terms thereof.

[15] I accordingly make the following order in the counter application

1. The first and second respondent’s award delivered on 7th May 2019 and annexed hereto marked “A” is made an order of court in terms of section 31 (1) of the Arbitration Act No. 42 of 1965

2. The applicant is to pay the costs of the counter application

__________________________________________

C G LAMONT

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

COUNSEL FOR APPLICANT

Adv. I Mureriwa

APPLICANT’S ATTORNEYS:

Werksmans Attorneys

COUNSEL FOR THE RESPONDENT: Adv. D. Watson

RESPONDENT’S ATTORNEYS:

Machingura Attorneys

DATE OF HEARING:

4 May 2020

DATE OF JUDGMENT:

8 May 2020